COMMISSIONER OF INCOME TAX Vs. PRAFULLA KUMAR MALLIK

JUDGEMENT

(1.) THE question of law referred by the Tribunal to this Court under S. 66 (1) of the Indian IT Act, 1922, for decision is :

(2.) THE provisions of S. 10 (1) and (2) (xv) of the Indian IT Act, 1922, so far as relevant for the present purpose, are these :

(3.) THE assessee worked as paddy procuring agent in the accounting year under the Government of Orissa. In exercise of the power under cl. 3 (d) quoted above, the Government levied in the course of the year penalties on the assessee amounting to Rs. 25,700. The assessee claimed to be entitled to deduct the said sum of Rs. 25,700 as allowable business expenditure under S. 10 (2) (xv). This contention was rejected by the ITO which in appeal was upheld by the AAC. 5. The Tribunal, however, accepted the assessee's contention and allowed the deduction. The CIT then made an application requiring the Tribunal to refer to the High Court the said question of law arising out of the Tribunal's order allowing the deduction. The said application was granted and consequently the Tribunal has referred to this Court the aforesaid question of law.